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California Tribal Coalition Announces Support For Unified Online Poker Bill [Text Inside]

California path to online poker
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A vast coalition of California’s tribal gaming interests have reached agreement on language for a bill that would bring legal, regulated online poker to the state.

“We are honored to inform you and your colleagues that for the first time in five years, the undersigned tribal governments are united in support of the attached unified language that would authorize intrastate Internet poker in the State of California,” the letter opens.

“As you know, this journey has been long and difficult, but the challenges posed by the Internet demand that we harness rather than cede the technology of the future for California and for our tribal communities.”

Read the letter announcing support and the bill draft text here.

Key points of California’s online poker bill

Read the full bill text here. This is, of course, a draft and not formally introduced legislation. But any material deviation from this draft at this stage of the game would likely derail the entire process.

  • There is a so-called “bad actors” clause that seeks a number of restrictions on those who participated in the US market after December 31st, 2006. More on that below.
  • Minimum age to play is 21.
  • Makes offering unlicensed online poker and playing on unlicensed sites a misdemeanor (19990.303).
  • Regulations would be adopted within 180 days.
  • The initial round of operator licenses are to take effect after one year of passage.
  • Only “a qualified federally recognized California Indian tribe” or “qualified card room” is eligible for an operator’s license.
  • License term is 10 years, with automatic 10 year renewals.
  • Licensees must pay a one-time license deposit of $5mm “credited against charges imposed pursuant to subdivision (b) on the licensed operator’s gross gaming revenues.”
  • License applicants must prove that they can pay the deposit on their own (so-called “false fronts” provision, 19990.402.(c)).
  • Ongoing fee for operators is 5% of GGR (19990.519.).
  • Maximum number of skins per license is two.
  • Operator employees “in direct contact with registered players” must be physically located in California.
  • Affiliates will need to acquire a service provider license.
  • The bill is poker-only, allowing for poker games “approved by the commission for play in an authorized live poker room in California under the Gambling Control Act” – except for Pai Gow or any dealer-based games (19990.201).

Full bill text here. California legislators have effectively until the end of August to move on the bill.

Tribes signing the letter

The tribes signing in support of the letter and the bill include:

  • Agua Caliente Band of Cahuilla Indians.
  • Barona Band of Mission Indians.
  • Cachil Dehe Band of Wintun Indians.
  • Lytton Band of Pomo Indians.
  • Pala Band of Mission Indians.
  • Paskenta Band of Nomlaki Indians.
  • Pechanga Band of  Luiseño Indians.
  • Rincon Band of Luiseño Indians.
  • San Manuel Band of Mission Indians.
  • Sycuan Band of Kumeyaay Indians.
  • United Auburn Indian Community.
  • Viejas Band of Kumeyaay Indians .
  • Yocha Dehe Wintun Nation.

Stars and Morongo remain on the outside

One tribe noticeably absent from the above list: Morongo, who, along with cardroom partners the Bike, Commerce and Hawaiian Gardens, recently announced a planned partnership with international online poker giant PokerStars.

Their absence is likely explained the bill’s aggressive approach to so-called “bad actors,” an approach that would shut PokerStars out of California’s market.

The clause is especially aggressive in this bill, which – as John Mehaffey noted over at COP – goes so far as to identify the bad actor aspect as non-severable, meaning that if that portion of the bill is struck down, the entire bill falls.

Morongo Chairman Robert Martin indicated at the recent California Conference on Online Gaming that his tribe would work to defeat any bill that contained such language. And this bill is full of it, setting up a possible confrontation that could threaten the success of the most credible push for regulated online poker in California to date.

For example, 19990.405.(b) prohibits a finding of suitability for anyone who:

(6) Has contemptuously defied a legislative investigative body, or other official investigative body of a state or of the United States or a foreign jurisdiction, when that body is engaged in the investigation of crimes relating to poker, official corruption related to poker activities, or criminal profiteering activity or organized crime, as defined in Section 186.2 of the Penal Code.

(8) Has knowingly and willfully accepted a bet or entered into a financial transaction related to such bet after December 31, 2006, from a person located in the United States on any form of Internet gambling, including, but not limited to, poker, that has not been affirmatively authorized by the law of the United States or of the state in which the person making the bet or where the related financial transaction was located, or has been the holder of a direct or indirect financial interest in a person or entity that has accepted that bet or engaged in such transaction.

That section applies to applications for operators licenses. Operators are further prohibited, via 19990.517.(c), from utilizing:

any brand or business name, including any derivative brand name with the same or similar wording, or any trade or service mark, software, technology, operational system, customer information, or other data acquired, derived, or developed directly or indirectly from any operation that has accepted a wager or engaged in a financial transaction related to such wager from any person in the United States on any form of Internet gaming after December 31, 2006.

… and, via 19990.605, from entering:

into a contract or agreement with a person or entity that has knowingly and intentionally accepted a wager from any person in the United States on any form of Internet gaming after December 31, 2006, except as authorized by this chapter or comparable federal or state law in the jurisdiction in which the wager was accepted or in which a financial transaction related thereto was located, or has been the holder of a direct or indirect financial interest in a person or entity that has accepted that wager unless the person or entity presents clear and convincing evidence to the department that the acceptance of such wager or entering into such transaction was not knowing or intentional and that the wager was accepted or the transaction was engaged in notwithstanding reasonable efforts by the service provider, its affiliate or subsidiary, to exclude bets from persons located in a jurisdiction in which it was not licensed or authorized to accept wagers.

Applicants for work permits are also potentially disqualified along the same lines, per 19990.602.(a), if:

The applicant was a key employee of an entity that has knowingly and intentionally accepted a wager from any person in the United States on any form of Internet gaming after December 31, 2006, except as authorized by this chapter or comparable federal or state law in the jurisdiction in which the wager was accepted or in which a financial transaction related thereto was located, or has been the holder of a direct or indirect financial interest in a person or entity that has accepted that wager unless the applicant presents clear and convincing evidence to the department that the acceptance of such wager or entering into such transaction was not knowing or intentional and that the wager was accepted or the transaction was engaged in notwithstanding reasonable efforts by the service provider, its affiliate or subsidiary, to exclude bets from persons located in a jurisdiction in which it was not licensed or authorized to accept wagers.

One final note of interest on this point. 19990.404.(3)(f), which covers service provider licensing, has this to say about the issue:

There shall be a rebuttable presumption that an applicant for a service provider license is unsuitable if the service provider or any corporate or marketing affiliate of the service provider, accepted any wager or engaged in transactions related to such wagers from persons in the United States in any form of Internet gaming after December 31, 2006, or proposes to use assets, whether owned by the applicant or any other entity, that were used to accept such wagers or engage in a financial transaction related thereto, unless the service provider or its affiliate was licensed pursuant to this chapter or comparable federal or state law in the jurisdiction in which the wager was accepted or the transaction was permitted. A service provider may rebut this presumption by presenting clear and convincing evidence to the department that the acceptance of such wager was not knowing or intentional and that the wager was accepted or the related financial transaction was entered into or conducted notwithstanding reasonable efforts by the service provider, its affiliate or subsidiary, to exclude bets from persons located in a jurisdiction in which it was not licensed or authorized to accept wagers.

California Tribal Coalition Announces Support For Unified Online Poker Bill [Text Inside]
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Chris Grove
- Chris is the publisher of OnlinePokerReport.com. Grove also serves as a consultant to various stakeholders in the regulated market for online gambling in the United States.